The Association of Oil Companies (UNKCG) has issued a communication to members of the parliamentary Committee on Economy and Finance, outlining concerns about discriminatory provisions within the proposed Law on Security of Petroleum Derivatives Supply, recently approved by the government and sent to Parliament for adoption.
According to UNKCG, while they support the parts of the law that align with pre-accession obligations to the EU and the Energy Community, they find that the current draft, although improved from its initial version, still contains provisions that unfairly disadvantage small domestic oil traders while potentially strengthening the privileged position of larger companies.
Under the proposed law, half of the future reserves of petroleum derivatives would be formed by companies engaged in their import and trade, with the remaining half to be provided by the state Hydrocarbon Administration. Funding for these reserves would come from a special fee of three cents per liter paid by all fuel consumers.
Initially conceived as requiring all strategic reserves to be formed by private importers and distributors, with one-third in physical form, the current proposal mandates that the Hydrocarbon Administration form half of the reserves, while private entities must form the other half in a manner of their choice—either through “tickets” (documents confirming purchase and possession) or in physical form.
UNKCG argues that this approach discriminates against traders importing up to 15,000 tons of petroleum derivatives annually, as well as those importing beyond this threshold.
Despite repeated requests to amend these provisions for fair market participation, UNKCG notes that Article 11, Paragraph 1 remains unchanged, obligating importers of less than 15,000 tons of petroleum derivatives to notify the Hydrocarbon Administration within 15 days to transfer the obligation to form mandatory reserves. Importers exceeding the threshold have the option to reserve “tickets” for the required fee, potentially benefiting from the law, although it is nominally profit-neutral, according to UNKCG.
The association believes that such a proposal could further empower foreign oil companies and major importers, potentially placing other economic participants at a competitive disadvantage. They propose amending Article 11, Paragraph 1 to replace the obligation phrase “must” with “may,” enabling all market participants, regardless of size, to transparently contribute to and enhance the implementation of the law.
UNKCG expects lawmakers to consider these concerns and incorporate their recommendations into the final draft of the law.
Concerning monopoly concerns, while the current draft includes provisions that seemingly comply with legal requirements, UNKCG asserts that most operational activities under the law would likely be monopolized by a single company due to its dominant market position. They argue that adopting such a proposal could increase Montenegro’s dependency on this company, Jugopetrol, affect citizen standards, weaken market competitiveness, and potentially threaten the viability of smaller retail players in the market.
UNKCG concludes its communication by highlighting Jugopetrol‘s selective sales practices at the Bar terminal during peak tourist seasons and heightened demand for petroleum derivatives. They suggest that such practices could influence the formulation of laws that allow sole participation in public tenders, ostensibly meeting legal requirements but with clear and potentially adverse outcomes.
